Question 4 

The role of an accountant involves providing advice to clients about changes in standards and the outcomes for how items are brought to account. In 2019 AASB 16 the Leasing standard changes. You are required to research the implications of the new leasing standard in terms of how Leases will now be accounted for and prepare a brief to be provided to clients. 

You may use the following points as a guide to structuring your answer. Make sure you reference any material used in your answer and include the reference list at the end of your answer. Answers will be marked according to the rubric provided below.

a. The current method of accounting for leases under the relevant standard AASB17

b. What are the major changes to be adopted under the new standard AASB16 in terms of agreements that meet the definition of a lease? For example what key evaluations will need to be made in order to apply the new definition?

c. Which businesses will be affected under AASB16?

d. What is driving the changes being made by the standard setters?

e. Are there any exceptions from lease accounting? For example will hire purchases agreements and rights held under licencing agreements such as motion picture films, patents and copyrights be caught by AASB16?

f. What will be the impacts to how leases are reported on the Income Statement and Balance Sheet?

g. Outline any transitioning problems businesses should anticipate.

h. What steps should organisations take to ensure a smooth transition to the new standard? For example consider whether the new standard is just an accounting issue?

i. Do you think the new standard is an improvement on the old and why?

j. Summary including other points that you consider relevant.